South Africa on edge waiting for good news
The South African rand was firm early on Monday, as investors looked ahead to inflation data and the possible removal of the country from the Financial Action Taskforce’s “grey” list.
In early trade the rand was at 17.3125 against the dollar, up 0.2% from its Friday close.
Domestically-focused investors will scrutinise September consumer price inflation data this week for clues on the health of Africa’s largest industrialised economy.
“We expect limited upside inflationary pressure with a marginal 0.1% m/m increase. This translates to 3.3% y/y, in line with last month’s reading and close to the central bank’s target of 3.0%,” Investec economist Lara Hodes said in a note.
Economists polled by Reuters expect inflation to edge up to 3.5% from 3.3% in August.
Global anti-money laundering watchdog FATF’s plenary meeting also takes place this week from Wednesday 22 October to Friday 24 October.
ETM Analytics said in a research note that South Africa remains on course to exit the FATF’s grey list of countries under increased scrutiny.
“Removal from the grey list may not have the same mechanical impact of increasing portfolio flows immediately, but it would lend the ZAR greater support over the medium to long term, and at the very least, remove one reason for not exposing a portfolio towards South Africa,” said ETM Analytics.
On the Johannesburg Stock Exchange, the Top-40 index was up 0.8% in early trade.
South Africa’s benchmark 2035 government bond was firmer in early deals, as the yield fell 1.5 basis points to 9.01%.
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